Challenges in Consumer Goods Industry
There are tens of thousands of general consumer products manufacturers in the United States. They compete to develop the best products at the most affordable price for the greatest number of consumers. Challenges for these organizations include meeting the changing demands of customers, maneuvering through a consolidating market, and executing strategies to grow profitably.
Some companies are part of traditional sectors (such as the clothing industry) that have existed for many years, while others, such as Apple and Dell, are part of the technology sector, which has emerged only in the last three decades. Manufacturers range from massive, multinational corporations to small firms with fewer than 50 employees.
In the past 10 years, the global market has witnessed a surge in demand as economies such as Brazil, Mexico, India, and China have opened up and begun rapid development. The consumer durables industry has always exhibited impressive growth despite strong competition and constant price cutting. There exists a very strong correlation between demand for durables and income. Leading players in this sector include Sony Corporation, Toshiba Corporation, Whirlpool Corporation, and Panasonic Corporation.
Developing countries such as India and China have largely been shielded from the backlash of the recession, as consumers continued to buy basic appliances. In fact, China has been ranked the second-biggest market in the world for consumer electronics. Despite the recession, their strong domestic economy and growing high-income population have buoyed demand leading to aggressive market growth.
The Internet has also changed the manner in which general consumer products are sold. Consumers can purchase almost any general consumer product they want and have it delivered to them without ever having to leave their homes.
The challenges faced by Consumer Durable Industry are listed below:
Changes in Delivery Model
Challenges for these organizations include meeting the changing demands of customers, maneuvering through a consolidating market, and executing strategies to grow profitably. Changes in delivery models have affected how CPG merchandise is being marketed. Coupons and loyalty card programs are designed with mobile end-users in mind and marketing initiatives are Omni-channel, providing the customer with a seamless shopping experience for frequently purchased products.
Changes in Consumer Expectations
A consumer's expectations are built on the basis of the information, which is gathered by word of mouth from friends, neighbors, and colleagues at work, shoppers, and the like. In addition, the various media where products may· be advertised, such as newspapers, magazines, hoardings, banners, neon signs, posters, radio, and T.V. commercials, all help to influence the consumer, in various ways, to change his/her expectations.
A common buying behavior seen among consumers is that of "Brand Preference". Consumers tend to purchase the same brand for many years if their experiences are good with respect to products meeting their expectations. If new products are launched under the same brand name, consumers expect it to have the same quality standards that they are used to, and often have no hesitation to try out the product. Studies have shown that brand image is built on the basis of a set of ideas and impressions that the consumer forms about a brand. He generally buys those brands which match his self-image.
Changes in Buying Behavior
The buying behavior of the consumer has shown considerable changes over the past few decades. Environmental changes that have taken place due to industrialization, urbanization, migration, occupational shifts, and modernization of lifestyles, are factors which have changed consumer expectations from products and services offered by the market.
Impact of Technology
Digital technologies are reshaping the consumer goods (CG) marketplace—and blurring the boundaries between stores and brands forever.
Other Challenges
Listed below are other challenges that are influencing the consumer goods sector:
- Local industry dynamics
- Supply-related issues pertaining to distribution and infrastructure
- Demand issues due to competition from imported goods
- Lack of well-developed distribution networks
- Penetrating fastest-growing rural areas
- Electricity availability
- Road infrastructure
- Systematic production
- Labor availability
- Increasing choice from both domestically produced and imported goods
- Superior technology
- A steady flow of capital
- Well-acknowledged brands
- Extensive distribution network
- Insight in local market conditions
Related Links
You May Also Like
-
Consumers benefit from retailing as retailers perform marketing functions that make it possible for customers to have access to a broad variety of products and services. Retailing also helps to create a place, time, and possession utilities. A retailer's service also helps to enhance a product's image. Retailing has a tremendous impact on the economy. It involves high annual sales and employment. Learn the importance of the retail industry in this article.
-
Retail Industry – Drivers & Dynamics
To succeed in the retail sector, retailers must offer compelling value propositions and be responsive to market dynamics. The continued rise of e-commerce has altered the dynamics of the retail industry in such a way that has forced retailers to drastically reallocate their resources to multi-channel strategies. This article focuses on retail industry drivers and dynamics that provide the reader with a basic understanding of the factors that influence this trade. Understand the business drivers and dynamics of retail industry
-
Retail Industry: Strategies for overcoming challenges
To stay competitive in this ever-evolving landscape, it is imperative for retailers to deliver a seamless customer experience and provide the right services and products at the right time. Learn the strategies for overcoming challenges for the retail industry. Retailers must use technology and solutions to revive their businesses in the COVID-19 world. An omnichannel marketing strategy can help retailers reach a wider audience for their brands.
-
Markets are continuously changing and to understand the dynamics of any industry it is important to understand what is happening and how the industry market players see the future for the industry. In this article, we will discuss the recent trends witnessed by the retail sector. This document provides insights into major trends identified for the retail sector.
-
Retailing is the combination of activities involved in selling or renting consumer goods and services directly to ultimate consumers for their personal or household use. In addition to selling, retailing includes such diverse activities as, buying, advertising, data processing, and maintaining inventory. This article explains the meaning of retail and its etymology. Understand the meaning and constituents of the retail industry and the role it plays in the economy of any nation.
-
Business Dynamics of Consumer Industry
The consumer goods industry is impacted by many dynamics like economic considerations, product considerations, price considerations that impact consumer buying choices. Advertisements, branding, marketing, variety of goods, and technology are the main drivers. Manufactures, retailers, warehousing, and logistics are all part of the supply chain for the consumer goods industry.
-
FMCG or consumer packaged goods (CPG) are products that are sold quickly and at relatively low cost, examples include non-durable goods such as soft drinks, toiletries, and grocery items. They generally sell in large quantities, so the cumulative profit on such products can be substantial and these industries often operate on thin margins.
-
The consumer goods sector is a category of stocks and companies that relate to items purchased by individuals and households rather than by manufacturers and industries. These companies make and sell products that are intended for direct use by the buyers for their own use and enjoyment. This sector includes companies involved with food production, packaged goods, clothing, beverages, automobiles, and electronics. Nestle, Procter & Gamble, and Pepsico are some of the world’s largest consumer goods companies in the world.
-
Retail Industry - Business Model
A retail business model articulates how a retailer creates value for its customers and appropriates value from the markets. In retail, a business model would dictate the product and/or services offered by the retailer, the pricing policy that he adopts. Many different types of retail establishments exist, and, the overall industry has seen a significant blurring of the boundaries that separated the wide range of retail businesses. Understand the key business models adopted by the retail industry. Understand the distinctive ways that retail industry players use to reach to the end consumer.
-
Retail Industry: Key Performance Metrics
You cannot manage what you do not measure and cannot measure what you do not define. Learn the key performance metrics for the retail industry like Sales per square foot, Gross margins return on investment, Average transaction value, Customer retention, Conversion rate, Foot traffic, and digital traffic and Inventory turnover, etc. These metrics are used across the globe by key industry players to track and improve their performance.
